3/23/2009 @ 8:50AM

Geithner Brief Translates To Asian Gusto

Ahead of Washingtons announcement of a fresh plan to remove as much as $1 trillion in toxic assets from the balance sheets of U.S. banks (see “Geithner’s Bank Plan: Winners And Losers”), Asian stocks were energized across the board; rising commodities and oil prices helped the resource sector. Chinas latest stimulus proposals for the auto and steel sectors as well as South Koreas pledge to unveil a detailed spending program for an extra budget of 29.0 trillion won ($20.6 billion) on Tuesday also helped revive investor confidence.

The benchmark Nikkei 225 soared by 269.57 points, or 3.4%, to 8,215.53, its highest close in more than seven weeks. The broader Topix index added 3.5%, to 791.56, on strong gains among banks and producers.

The dollar traded around 96.15 yen in late afternoon, strengthening from near 94.54 Friday, giving Japanese exporters a slight reprieve.

Mitsubishi UFJ Financial Group
said it will slash its labor force by 1,000 employees and shut down 50 bank branches over the next three years. Shares rose by 23 yen (24 cents), or 4.7%, to 512 yen ($5.33). The country’s other mega-lenders were trading up by even greater percentages.

Merrill Lynch revised its oil forecast to $52 a barrel, from $50 a barrel, “on the back of a tighter-than-expected oil market balance” heading into the second half of 2009. On the back of crude’s rally, Japan’s
Nippon Oil
gained 35 yen (36 cents), or 7.5%, to 503 yen ($5.24), while exploration company Inpex Corp. welled up by 46,000 yen ($479.29), or 6.7%, to 730,000 yen ($7,606.15).

Meanwhile, Hong Kong’s consumer inflation abated more than expected, to 2.1% in February, compared with last year’s corresponding period. Morgan Stanley now forecasts 1.5% inflation in 2009 and 1.5% deflation in 2010, as the territory sinks further into recession. Still, the Hang Seng index rallied by 613.91points, or 4.8%, to a five-week high at 13,447.42.

The Shanghai Composite index was up by 44.39 points, or 2.0%, at 2,325.48. Automakers gained as Beijing unveiled further aid for the auto industry to maintain its 10% annual growth target over the next three years. (See “Beijing Redeploys Its Carmakers For Global Race.”) Shares of FAW Car Co. jumped by 73 fen (11 cents), or 6.2%, to 12.60 yuan ($1.84) in Shanghai. SAIC Motor Corp., Chinas biggest automaker, gained 51 fen (7 cents), or 5.3%, or to 10.05 yuan ($1.47). Baoshan Iron & Steel added 7 fen (1 cent), or 1.2 %, to 5.78 yuan (85 cents), after Beijing pledged to back the bid by its parent company, Baoshan Group, to take over Ningbo Iron & Steel Group and Baotou Iron & Steel Group as part of the governments plan to consolidate the steel industry.

Taiwanese chip makers continued to work on deals to save the struggling industry. Taiwan’s Taiex weighted index added 162.56 points, or 3.3%, to 5,124.18, as Taipei continued to negotiate consolidation efforts between domestic and foreign chip manufacturers. ProMOS Technologies got bondholders to agree to a heavily discounted bond buyback, allowing the troubled chip maker to avoid default. Shares jumped by 6 New Taiwan cents (less than 1 cent), or 6.7%, to 96 New Taiwan cents (3 cents).

In a move that will help relieve the South Korean financial system’s dollar shortage, the Bank of Korea is in talks with China’s central bank to convert part of a 38 trillion won ($27.2 billion) currency swap facility into dollars. South Korea and the European Union are also in the “final round” of talks to negotiate a free-trade agreement, a Korean representative to the discussions said. To prevent the economy from slipping further into recession, Seoul officials said Sunday that the government is ready to spend 27 trillion won ($19.3 billion) to 29 trillion won to create jobs and to help low-income groups.

South Korea’s KOSPI index moved up by 28.56 points, or 2.4%, to 1,199.50.
KB Financial Group
jumped by 1,600 won ($1.15), or 5.0%, to 33,500 won ($24.06), after the company said its executives have decided to give up their stock options so as to share the financial burden of the sharply sliding economy with all investors.
Hynix Semiconductor
shot up by 720 won (52 cents), or 7.5%, to 10,300 won ($7.37), on the ProMOS news from Taiwan, and LG Electronics powered up by 4,000 won ($2.86), or 4.7%, to 88,900 won ($63.59), on investor optimism about its earnings.

Australia’s S&P/ASX 200 advanced 84.50 points, or 2.4%, to 3,550.30. The broader All Ordinaries index similarly progressed by 2.3%, to 3,493.10. New Zealand’s NZX 50 index edged off by 7.60 points, or 0.3%, to 2,591.42.

Mining giant
Rio Tinto
shot up by 7.9%, or 3.68 Australian dollars ($2.57), to 50.53 Australian dollars ($35.23). OZ Minerals was halted from trading, down 1 Australian penny, or 1.7%, at 59 Australian cents (cents), after the Australian Foreign Investment Review Board extended by ninety days its consideration of China Minmetals Group’s proposed 2.6 billion Australian dollar ($1.8 billion) takeover of the debt-burdened mining firm.

Elsewhere in Asia, Indias BSE Sensex 30 benchmark index roared ahead by by 457.34 points, or 5.1%, to 9,424.02, on the day when the Tata Motors Nano was scheduled to go on sale. Singapores Straits Times index incremented by 67.16 points, or 4.2%, to 1,664.08. Bangkok’s Thai SET 50 index wafted higher by 6.86 points, or 2.3%, at 305.72.

Light, sweet crude for May delivery gained 61 cents, to 52.68 a barrel, by late afternoon Asian trading hours on the New York Mercantile Exchange.